Corporate & Global Strategy Flashcards
(33 cards)
Build
Internal organic growth through development
Borrow
External growth through a contract / strategic alliance
Buy
External growth through acquiring new resources, capabilities, and competencies
Main Qs in BBB Framework
- Relevancy
- Tardability
- Closeness
- Integration
Main Qs in BBB Framework: Relevancy
Internal recs are relevant if:
- Similar to those firm needs to develop
- Superior to those of competitors in targeted area
Main Qs in BBB Framework: Tardability
Firm creates a contract to:
- Transfer ownership
- Allow use of the resource
Main Qs in BBB Framework: Closeness
Closeness can be achieved through alliances
- Equity alliances
- Joint ventures
- This enables resource borrowing
Main Qs in BBB Framework: Integration
Conditions for integrating the target firm:
* Low relevancy
* Low tradability
* High need for closeness
Strategic Alliance
A voluntary arrangement between firms that involves the sharing of:
- Knowledge
- Resources
- Capabilities
To develop:
- Processes, products, services
Why firms enter Strategic Alliance
1) Strengthen competitive position
2) Enter new markets
3) Hedge against uncertainty
4) Access critical complementary assets
5) Learn new capabilities
Strategic Alliances can be governed by:
- Non-Equity Alliances (partnerships based on contracts)
- Equity Alliances (1 party takes partial ownership in the other)
- JVs (standalone org, jointly owned by 2+ companies)
Alliance Management Capability
Partner selection & alliance formation > alliance design & governance > post-formation alliance management
Post-formation Alliance Management
To be a source of CA, partnership has to create VRIO combinations:
- Make relation-specific investments
- Establish knowledge-sharing routines
- Build inter-firm trust
Combination of these 3 is how to make alliances work
Merger
The joining of two independent companies:
- Forms a combined entity
- Horizontal to reduce competition, lower cost, and differentiate
- Tends to be friendly
Acquisition
Purchase of one company by another:
- Can be friendly or unfriendly
- To access new markets & distribution channels; to overcome entry barriers; to access a new capability or competency; to preempt rivals
- Considered a hostile takeover when the target firm does not wish to be acquired
M&A CA
In most cases M&As:
- Do not create competitive advantage
- Do not realize anticipated synergies
- Result in destroyed shareholder value
Why mergers take place:
- Principal-agent problems
- To build a larger empire
- To receive prestige, power, and higher pay
- To overcome competitive disadvantage
- Superior acquisition and integration capability
Globalization
Closer integration + exchange between countries + peoples worldwide
How is Globalization made possible
- Falling trade and investment barriers
- Advances in telecommunications
- Reductions in transportation costs
Globalization shift definition
Shift to a more integrated and interdependent world economy
Globalization B&D definition
- Broadening (extension of economic and geographic linkages to encompass virtually all major societies and states)
- & Deepening (increase in the frequency and intensity of state and societal interactions)
- of interactions and interdependences among peoples and countries of the world
Globalization of Markets
Merging of historically distinct and separate national markets into one huge global marketplace
Globalization of Markets: Baywatch
Estimated weekly audience of 1.1B in 142 countries
Been seen in 148 countries + translated into 44 languages
Globalization of Production
Sourcing of G&S from locations around the globe to take advantage of national differences in the cost and quality of FOPs (labor, energy, land, and capital)
